This takes the proposal and the client's requirements and fleshes them out into a high-level design. You'll note that well-developed Use Case diagrams and high-level class diagrams and interaction diagrams are recommended as part of the deliverable.
Use the power of the UML creatively! The "classes" illustrated in the FSD don't necessarily reflect the actual classes that will be used to implement the system. For example, you might want to illustrate how a web-based system will work by representing the various web pages as classes in a UML Sequence diagram. Later, in the Technical System Design. you will generate diagrams that illustrate this same flow using the actual classes that you will design.
This is also where you use your expertise to determine what tools will best get the job done, and what the "look-and-feel" of the system components will be. After this phase you may have the additional step of hiring talent for the project if you don't already have it on-hand.
Originator: The contractor, for approval by the client.
Deliverable: Functional System Design document. (template)
The House: Phase 4 is the floorplan, and in fact the diagrams listed above are the exact data and process equivalents of a floorplan! The floorplan gives you an overall feel of how the house will look, where things will be located, use of space, etc. It is also a physical document that illustrates that the architect understands and has addressed the requirements you've given him in the last phase. This is still a high-level plan, though, and gives you a feel for the finished product without getting you bogged down in confusing detail.
Phase 3. Business Requirements Phase 5. Technical System Design